FinCEN Beneficial Ownership Reporting Update: FAQs on Ceasing Entities

Introduction

The Financial Crimes Enforcement Network has finalized vital updates with regard to the necessities based on reporting the beneficial ownership information. Such change is likely to be far more effective towards increased transparency and would help in the fight against financial crimes. In this blog post of ours, we'll explore one area that puts much importance on the reporting of ceasing entities as we tackle some of the most common questions about reporting ceasing entities under the newly revised FinCEN regulations.

What is a ceasing entity?

A ceasing entity is an entity of which the legal entity no longer is active or has ceased to exist. It includes corporations, LLCs, partnerships, and so forth. The purpose of filing with FinCEN about a ceasing entity is for record accuracy as well as for prevention purposes

When Must a Ceasing Entity File with FinCEN?

An entity ceasing, in most cases, is to file a report with FinCEN within 90 days from the date of its dissolution or dissolution. In this regard, the period will suffice for such time that will ensure information availability, with monitoring and enforcement being effective.

What Must the Information Contained in a Ceasing Entity Report Include?

A ceasing entity report varies from one case to another but generally can be said to possess most contents.

Identity of the ceasing entity: Name, address, and any other identifier of the ceasing entity.

Date of cessation: When the entity actually stopped its operation or was dissolved.

Cause of cessation :The actual event or cause that ended the life of the entity like through the process of merger, acquisition or dissolution

Beneficial ownership information:All changes in the beneficial owners of the entity before the date of its cessation.

How does a ceasing entity file its report?

The filing of a ceasing entity report may differ from one jurisdiction to another and is usually subject to the requirements designed for that type of entity. In most of these cases, the filer should be able to file via FinCEN's online portal or even via a paper application form. In such instances, consultation with applicable regulations or legal counsel may be advisable to verify proper filing.

What happens when one does not report a ceasing entity?

If one fails to report a ceasing entity to FinCEN, they then face severe penalties and legal ramifications as a result. Some such penalties include fines, civil penalties, and criminal prosecution. Therefore, there is a need for keeping in line with the reporting requirements to ensure that some of these penalties and facts surrounding the regulation are put in check.

Conclusion

The FinCEN beneficial ownership reporting updates introduce new requirements to cease. Because of the new regulations, entities will take a sense of responsibility and intent in performing their duty to prevent financial crimes and be transparent. It is wise to ask or raise your concerns with a legal professional for reporting requirements of the entities that need to cease.